Tag: jobs

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free trade & free markets national politics & policies too much government

Nails & Ball-​Peen Hammers

When all you have is a hammer, every problem looks like a nail. When it comes to “jobs,” our politicians prove the truth of this adage over and over. They think that they have to “do something,” or at least “look busy” providing “leadership.”

Wrong — unless they take the lead to get out of the way.

Alas, few have the courage for that kind of leadership.

Republican politicians — fearing “looking bad” — are, even now, floating various “plans” to create “jobs.”

“I thought it was incumbent on me to at least say … ‘We’re working on a plan,’” says one incumbent.

Trouble is, whatever plan he or his colleagues put up to counter the president’s absurdities, odds are that it, too, will not work.

Why?

The trouble with markets right now is uncertainty. Several sectors went bust, and it’s not easy to get progress started again … especially when the government keeps cooking up game-​changers. Solutions. “Fixes.” Political machinations — subsidies or regulations or any of the usual tools in the politicians’ tool belt — just increase uncertainty, muddying up the recovery.

The neat thing about markets is that none of us need to know how, exactly, to order the “economy” for order to be discovered. It works out. This is old wisdom, but even actual experimentation has shown that this is the case.

The economy is not a mess of boards half-​nailed down. The last thing it needs is more hammering from politicians.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

Why Such Slow Growth

Why such slow growth, after the federal government spent trillions to spark recovery?

Could it be that binges of throwing borrowed money around don’t matter? Spending money can’t be the solution if the problem is low or dark expectations of the future — and the spending of borrowed money feeds that dark view.

So what is the solution? 

Well, take a step back. According to economic historian Robert Higgs, the key to economic growth is “private domestic business net investment.” And that’s down. 

The peak occurred in 2007. The next two years saw the very opposite of growth, a precipitous fall in investments in private business. Last year, Higgs tells us, “net private investment increased smartly for three quarters, reaching an annual rate of $270 billion in the third quarter, then contracted sharply — by almost 47 percent — to $144 billion in the fourth quarter,” which is about a third of what it was at peak in 2007.

“Jobs,” which everybody’s thinking about, don’t come from spending as such. New jobs happen when people who save take their unspent money and invest it in production processes that they hope will yield goods that consumers in the future will spend money on.

So, private investment depends on positive expectations, a kind of rational hope.

What could government do? 

Provide less reason for fear by putting a halt to doing things that elicit rational fear instead of rational hope.

Saner government, more productive economy.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government U.S. Constitution

Not His Job

President Obama will address the State of the Union, today, speaking before Congress. These annual efforts are almost uniformly unbearable, with too much applause and too much rah-​rah-​boy politicking. And far too little thought.

Scuttlebutt has it that the president will concentrate on the economy, on “jobs.”

After the sea change of the last election, one might hope that he’d stay on topic and address constitutionally-​mandated issues of his office.

“Jobs” are none of his business. “Jobs” — by which I mean the number of people employed this way or that out there in the non-​governmental sector, and by which he means the number of jobs total, including those paid for out of taxpayer expense — should not be his chief worry.

No president in recent memory has excelled by fiddling with policy to micromanage “the economy.” No one knows this stuff. Not even college professors specializing in macroeconomics.

What government operatives know is how to get elected, stay in office. How to preen for television cameras, read a prompter.

You know, the essentials.

But they cannot possibly know enough to “run the economy.”

And yet, Obama talks about making the country “more competitive.” Oh, come on. Just open up trade — which promotes widespread co-​operation as well as competition — stop micromanaging the money supply through the Fed, make regulations fit a rule of law and not a vast bureaucratic command system, and let it go. Let individuals and businesses worry about “competiveness.”

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Multiplication and Division

John Maynard Keynes’s most popular notion was his infamous “multiplier” effect. Spend some government (taxpayer) money, and the effects “multiply” in the economy, as if the Invisible Hand were on speed. 

The truth is the reverse: “the divider” effect. Create government jobs and progress in the marketplace “divides” as a result of the increased taxes needed to support the jobs. 

Our orator-​in-​chief also says he’s in the business of “saving jobs.” Like most politicians, he loves “multiplier” talk, because it gives him the green light to spend.

But, like the bank bailouts, what’s really happening with stimulus spending is that some people are getting raises and bonuses while the unemployment rate goes double-digit.

The actual multiplier effect regards talk. For every dollar government spends, politicians claim umpteen more jobs “saved.” It’s not reality. The multiplication effect occurs entirely in rhetoric and in PowerPoint presentations. 

The New York Times tells us how “the federal government spent $1,047 in stimulus money to buy a rider mower” for a cemetery in Arkansas. Then, “a report on the government’s stimulus Web site improbably claims that that single lawn mower sale helped save or create 50 jobs.”

The magic of this sort of job creation doesn’t rest upon the logic of markets. Here the magic lies simply in the lying. The “multiplier” multiplies because politicians tell multiple lies.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

Gross Jobs

The president says he’s creating jobs. I’m skeptical. I guess there are some things government can do to ensure that jobs get created, out there in the bill-​paying, profit-​making world. But these do not include spending trillions of borrowed money.

And neither do they include simply giving more money to state and local governments.

The truth about Obama’s much-​ballyhooed job creation is that more than half of his alleged new jobs turn out to be government jobs.

Government jobs don’t count, Mr. President. 

Remember, many things governments do actually drain us. Jobs in the marketplace, on the other hand, serve real consumer demand, make us all better off. They also help pay the taxes for those government jobs. Employing more people in government means needing more real jobs to pay for the government ones.

And how much work do politicians cause us to engage in just to unbury ourselves from their silly, wealth-​extracting regulations? I know, I know: Every time they add on some new complication to the tax code, jobs emerge in the accounting and tax-​consulting industry. But this doesn’t exactly make us better off, does it? Not on net.

This lesson applies generally. Here’s the bottom line. Government can borrow and tax to spend to create “gross jobs.” Sure. But on net, after balancing the collective books, we’re not better off.

This is Common Sense. I’m Paul Jacob.